London pre-open: Stocks to drop after US losses on trade war woes, tech selloff

Stocks in London were set to drop at the open on Tuesday following heavy losses on Wall Street on the back of weakness in the technology sector and renewed trade war worries.

The FTSE 100 was called to open 36 points lower at 7,020.

CMC Markets analyst David Madden said: "President Trump gave with one hand and is now taking away with another. At the beginning of the year, US stock markets reached fresh record highs on the back of Trump’s tax initiative, but now his trade war and attacks on Amazon sending investors running scared.

"Yesterday China’s tariffs on some specific US products came into effect, and this rattled investor confidence. Beijing decided to impose levies on approximately $3 billion worth of goods from the US. In the grand scheme of things, China’s response hasn’t been too aggressive, but dealers fear we could be starting a long trade war. The ball is now in Trump’s in court, and traders are waiting for the US President to make the next move."

As far as technology stocks are concerned, Amazon was under pressure after Trump said the technology giant is not paying its fair share of taxes.

"Jeff Bezos is the CEO of Amazon, and is also the owner of the Washington Post - which has been critical support of the Trump administration. It is possible the pressure Amazon is coming under is due to the politics of it CEO, but while it remains on Mr Trumps radar it is likely investors will steer clear of the stock," said Madden.

On the data front, Markit's manufacturing PMI for the UK is at 0930 BST. Deutsche Bank expects activity in March to have fall marginally due to adverse weather conditions disrupting factory output and supply chains.

"This recent dip in manufacturing activity was corroborated by the BoE's latest business conditions survey, released this past week. Overall, however, despite weakened domestic demand, we anticipate the manufacturing sector to remain relatively strong this year, fuelled by global growth and trade."

In corporate news, Anglo American suspended its Minas-Rio iron ore operation in Brazil after two pipeline leaks were found last month. The mining giant stopped work at the location last Thursday in order to conduct a full inspection of the pipeline that carries iron ore, in slurry form, from the mine to the export terminal.

Twenty-First Century Fox has proposed ring-fencing Sky News with funding for 15 years and personal pledges not to influence the news broadcaster’s output. Alternatively Walt Disney has expressed interest in acquiring Sky News whether or not the US company’s acquisition of 21CF goes ahead.

BGEO's subsidiary, M2 Real Estate, has acquired an 8,512 square metre land plot in Telavi, Kakheti, for $1.5m in cash, on which it plans to develop a hotel.

The hotel, which would be developed over the next two years, would have around 130 rooms. Telavi is the largest city in eastern Georgia and a major tourist destination, known as a major wine region.